Renowned economist and finance professor Jeremy Siegel is confident that the stock market bull run is far from over, pointing to a specific group of stocks that he believes have significant room for growth.
Siegel, known for his expertise in financial markets, recently spoke with Bloomberg about the current state of the market. He expressed his belief that the momentum in the market is strong and that there is still more upside potential for investors.
One of the standout sectors in the market has been the tech sector, which saw exceptional performance last year from a group of mega-cap tech giants known as the “Magnificent Seven.” This group includes companies like Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla. More recently, Amazon, Meta, Microsoft, and Nvidia have continued to perform well, leading some to refer to them as the “Fabulous Four.”
Despite the extended rally in stocks, Siegel does not believe that the entire market is overvalued. He pointed out that the tech sector is trading at around 25 to 30 times earnings, which he considers reasonable. When looking at other sectors outside of tech, valuations are closer to historical averages, around 17 times forward earnings.
Siegel also highlighted opportunities in mid-cap and small-cap stocks, which he believes have low valuations and significant growth potential. These categories of stocks can offer diversification and potentially higher rewards for investors willing to take on a bit more risk.
For investors looking to gain exposure to these opportunities without picking individual stocks, Siegel suggests considering ETFs like the SPDR S&P MidCap 400 ETF Trust (MDY), iShares Core S&P Mid-Cap ETF (IJH), iShares Russell 2000 ETF (IWM), and Vanguard Small-Cap ETF (VB).
Overall, Siegel’s outlook on the market is optimistic, with a focus on the potential for continued growth in certain sectors and groups of stocks. Investors may want to consider his insights when making decisions about their investment portfolios.
